The Government of Nayib Bukele has agreed, in an agreement with the International Monetary Fund (IMF), not to buy more bitcoin and has transferred “the majority ownership and control” of more than 7,763 cryptocurrencies, valued at more than 632 million dollars, into the hands of “a private operator,” according to a statement issued this Thursday by the Fund.
The announcement comes within the framework of the third review of compliance with the conditions for a loan for 1.4 billion dollars, scheduled in several disbursements and executed from the beginning of 2025. This is a new setback for one of Bukele's most controversial and ambitious projects, after in January of this year he withdrew bitcoin as legal tender, also due to pressure from the IMF.
According to the Fund's statement, the Government will maintain “a minority participation and custody responsibility over the assets”, now in private hands. The entity did not specify to which company or under what conditions the cryptocurrencies purchased with public funds have been transferred.
Since the Government adopted bitcoin as legal tender, all information about its cost and administration has remained confidential. The only accessible information is known through The Bitcoin Office website, the official disclosure site for the so-called Bitcoin Funds. According to that office, the Executive has continued to acquire the cryptocurrency even after signing the loan with the IMF, despite the fact that stopping the investment was an explicit condition for this.
In the statement issued on Thursday, however, the financial entity points out that the latest bitcoins have been acquired thanks to “private donations and did not involve the use of public resources” and stressed that the Government promised not to invest more. “Going forward, no additional accumulation of bitcoin beyond documented donations is anticipated,” the document says.
State opacity
Bukele began his crusade for bitcoin in June 2021, when he established it as legal tender, ensuring that its implementation would bring prosperity, economic freedom, and financial inclusion. However, the measure was rejected by 71% of the population and only a small percentage ever used it, according to local measurements.
To launch it, the Government created a trust of 150 million dollars and gave a “bonus” of 30 dollars to each citizen who downloaded the Chivo Wallet digital wallet on their phone. It also invested another 50 million in installing ATMs and launching logistics. Although many citizens downloaded it, most spent the incentive and stopped using it.
The same year that the platform was launched, the Prosecutor's Office reported hundreds of complaints of identity theft and theft that reached an amount of up to $840,000, according to journalistic investigations. The company behind the government wallet is Chivo Wallet S.A., a public-private partnership that cannot be audited.
The management of bitcoin has been obscure and the expense does not appear in the execution of the State budget. In the face of criticism, Bukele has shown, as is characteristic of him, a challenging attitude and has even suggested that he buys bitcoin with public money from his phone while he is in the bathroom. In November 2022, when the price of the cryptocurrency fell almost 30%, he posted on his X account that, from that moment on, he would buy “one bitcoin a day.”
In January of this year, after pressure from the IMF, the ruling party backed down and withdrew bitcoin as legal tender, modifying six of the sixteen articles of its own law. However, The Bitcoin Office has published the acquisition of 1,714 more bitcoins, allegedly coming from “donations.” Authorities have not revealed who the alleged donors are.
To date, it is not clear where the funds come from or who controls them. According to the law, the Central Reserve Bank (BCR) is the entity in charge of managing the country's international reserves; However, bitcoin funds do not appear in your accounts in any fiscal year.
Bukele presented the adoption of bitcoin as one of his greatest successes to the world in 2021. That same year, El Salvador came to be baptized as “the country of bitcoin.” But it took little time for the promise to collide with reality: at the end of 2022, 91.7% of the population considered that their economic situation remained the same or had worsened, according to surveys. Two years later, in mid-2024, a BCR study revealed that the number of people in poverty had increased by 55,000 compared to the previous year.
